How can a book that's not alive make anything up?
Kidding aside, why can't the book of Job be a work of fiction, describing things from the author's own imagination?
Or perhaps there were tales of monsters in that area. I'm sure you've heard of the telephone game.
A whale spout from a distance might appear to be smoke. That's all the first person would need to see: smoke. Then someone would say that there must have been fire, as well, since smoke typically doesn't occur without fire. From then on, other aspects are applied to the creature, such as ferocity. Suppose the whale in question was peaceful, but other sailors encountered more aggressive animals, and mistook them for the same animal?
I'm not saying these people were stupid, not at all. Our brains are still as capable of making these mistakes, especially when excited by fear, as they were long ago.